Luxury Tax Cut; Activists Question Govt's Pledge on Sustainable Development



Markus Wisnu Murti

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  • TEMPO.CO, JakartaActivists from several non-governmental organizations (NGOs) lamented Coordinating Minister for Economic Affairs Airlangga Hartarto's decision to greenlight the relaxation of the luxury tax or PPnBM.

    The NGOs include the Bike to Work or B2W Indonesia, Greenpeace Indonesia, the Institute for Transportation and Development Policy (ITDP) Indonesia, and the Rujak Center for Urban Studies.

    They demanded the deliberations of the relaxation's regulations be scrapped as it was contrary to the government's commitment to sustainable development.

    “This has reaffirmed that the government could not care less about efforts to overcome the causes of environmental damages, urban life that is more inhuman and centered on motorized vehicles, and the high number of victims of road accidents,” as quoted from the press release of the mentioned NGOs on Monday, February 15.

    The activists, however, did not deny that relaxing the luxury tax might increase production and revive the automotive industry in order to boost the economy in the wake of the COVID-19 pandemic as claimed by Airlangga. Yet, they argued that it would not be worth the losses incurred.

    Previously, Coordinating Minister for Economic Affairs Airlangga Hartarto approved the Industry Ministry's proposal on the gradual relaxation of sales tax for motorized vehicles in 2021. The government will reportedly bear the tax for vehicles under 1,500 cc with 70 percent local content.

    Read: Steep Luxury Tax May Drive Out Superbrand Cars from Indonesia